CNet's Ina Fried reports that Microsoft has decided to remove Windows Photo Gallery, Windows Movie Maker, and Windows Mail from Windows 7. Given the fact that Microsoft continues to upgrade its Live replacements for Photo Gallery and Mail, and added Movie Maker to the Live family, as we reported last week, this move seems to make a lot of sense.

As someone who's been recommending that Windows Vista users replace Windows Photo Gallery with Windows Live Photo Gallery ever since Live Photo Gallery was launched, I think that stripping Windows of utilities that only some people will use makes plenty of sense. Here's why:

1. Faster development of operating system releases. As Windows Live general manager Brian Hall told Fried, "It [this decision]makes it [Windows 7] much cleaner."

2. Fewer worries about antitrust actions. Lawsuits by the EU forced Microsoft to distribute EU-specific versions of Windows XP and Windows Vista that are missing Windows Media Player. By dropping other multimedia features, Microsoft makes Windows 7 even less appealing as a lawsuit target.

3. New partnership opportunities. According to Hall,"We can do things with specific partners to enable really great experiences that might be hard in Windows." We might see Windows 7+Adobe, Windows 7+Corel, or Windows 7+open source bundles from various OEMs.

4. Fewer opportunities for compatibility problems. As anyone who has ever wrestled with Windows Vista multimedia tools being broken by installing third-party tools (I recommend the freeware Vista Codec Package, available at http://shark007.net, if you can't burn CDs or DVDs in Windows Vista anymore after installing a third-party DVD burner), the possibility of reducing the chances of a "codec war" or other compatibility problems is a welcome one.

So, what do you think? Do you like the idea of choosing your favorite free or commercial photo, video, and email clients right from the start, or do you prefer the current method? Are you more likely to buy a preinstalled version of Windows 7 if it had a well-integrated third-party media and email software bundle, or do you prefer to create your own "best of breed" combination? Do you have a horror story of third-party apps and Windows butting heads? Tell them now before Windows 7 does away with them. Hit the jump for your chance.

Windows Live Hotmail’s 260 million users worldwide can look forward to a multitude of new features that were recently unveiled by Microsoft. Hotmail wave 3 promises a speed boost of over 70% during sign in, and will enable dynamic storage that will grow at a rate of 250 MB per month. Microsoft is also reportedly working to address the user interface problems which have plagued the service since the roll out of wave 2. Hotmail users currently have the option of picking between the well loved “classic” or the “full” user interface which reportedly suffers from a low adoption rate. This low adoption rate has kept the classic version alive, and made it difficult for Microsoft to roll out new features. Hotmail wave 3 looks to merge the layout of the “classic” with the functionality of the “full”, an approach they are hoping will finally please everyone. This is something that is desperately needed to help attract and retain users currently considering competing services such as Gmail or Yahoo. Improved integration of Live contacts, calendar, and instant messaging help to round out the initial batch of leaked features. The press release doesn’t make any mention of the long rumored POP support or any Skydrive integration, but hopefully these features are still in the works. No public beta has been announced yet, but the “coming soon” headline suggests it probably isn’t that far off.

Are you a former or current Hotmail user? Will these new features keep you with the service or send you running back? Hit the jump and let us know what you think.